No Minister

Concrete Planning

There have been many reports over the last few years about China’s “ghost” cities, monuments to China’s vast consumption of concrete and steel over the last decade as it indulged in a Keynesian effort to reduce the fallout of the GFC to its national economy.

China’s massive spend up certainly made a lot of other countries like Australia very happy as they exported iron ore and other basic commodities to the Chinese economy. It certainly helped them move out of the shadow of the GFC.

The country has used more cement in its construction of new cities between 2011 to 2013 than the entirety of the United States in the 20th century.

But the problem with all of this was always the hobgoblin of statists everywhere and for all time; the mismatch between what central planners thought the economy needed and actual economic demand from the people who make up an economy.

Those ghosts cities remained empty of people as the years ticked by. So we come to the inevitable:

Fifteen skyscrapers that were part of the Liyang Star City Phase II Project just demolished after sitting unfinished for eight years due to no market demand.

I note that one of the buildings remains leaning at an angle. All of this should be a stark reminder that China is not the all-enveloping economic beast that people expect it to be in the 21st century. It’s going to get old before it gets rich, and Xi Jinping is actually trying to force it back to a more communist approach to many things, including a bigger state role in planning.

As an addition, check out photos of these ghost cities.

Written by Tom Hunter

September 16, 2021 at 6:58 pm

6 Responses

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  1. Of course you (and others) have put your own narrative and spin over this but it is really a more universal story of a developer over estimating his ability to complete a grandiose project and running out of money before the job can be completed

    After a decade of it rotting away with no progress being made it was deemed to be cheaper to bring the whole thing down than finish it

    I carry no water for China but at this stage in human history they are far better at building things than the West is – which is why this has been seized upon to be used to sneer at them of course

    It was Edison that said “invention is 1% inspiration and 99% perspiration” which is true of all things

    Most grand schemes wither on the vine usually long before they get as far along as this one did

    John Key and the 5th National Government pulled off “the Fibre Rollout” the last great infrastructure project in New Zealand. That is his legacy, the right project, in the right place at the right time

    Now we are talking about cycleways across the Auckland Harbour Bridge, a concept that has already eaten quite a bit of money with no tangible return in the foreseeable future…

    … and hydrogen powered aircraft. For sure you can spin a gas turbine with any combustible fuel from pulverized coal to kerosine and JCB have adapted their conventional combustion ignition (“diesel”) engines to run on hydrogen. That’s the “easy” bit but the joker in the pack remains, where does the hydrogen come from?

    Andrei

    September 17, 2021 at 7:21 am

  2. Building things is not going to work well if they’re economically stupid things, especially with the demographic crunch facing China in the next twenty years and beyond.

    There’s also no point aiming at the private contractors who build these things: in China those ghost cities were done on the basis of government plans and demands.

    Tom Hunter

    September 17, 2021 at 9:08 am

    • Tom you are being ideological – projects come unglued in every nation under the sun and people go bankrupt

      That’s why we have Receivers to sort out the mess when it happens

      There are many of examples here in New Zealand, unfinished subdivisions are classic examples. In the 1990s there were several examples involving new apartment buildings in both Auckland and Wellington

      When the RMS Queen Mary, currently a rotting hulk in Long Beach California, was being built by John Brown in Glasgow Cunard ran out of money and couldn’t complete her.

      John Brown had to lay off their workers and the hull sat on the slipway for a couple of years until the British Government bailed the project out.

      The ship itself had a successful career and played an important role in WW2 despite its troubled start in life

      China is using a lot of concrete, another of your the sneers in your post, because they are building a lot of infrastructure and a lot of it is down right amazing.

      You want to focus of a dud, your prerogative but it concerns me more that during the first lockdown a sewer failed in wellington and the replacement parts had to be fabricated in Germany and installed under the supervision of German engineers who were permitted entry into this country despite our closed borders

      Andrei

      September 17, 2021 at 12:01 pm

    • another of your the sneers in your post, because they are building a lot of infrastructure and a lot of it is down right amazing.

      Jeez Andrei, it’s not sneering. Even for a country of 1.2 billion people don’t you think that having more cement used between 2011 and 2013 than the entirety of the United States in the 20th century is OTT? They didn’t do that even as the economy grew by double digits from 1980 into the 2000’s.

      To me it’s just the expected result of Keynesian overkill.

      Tom Hunter

      September 17, 2021 at 12:23 pm

    • Even for a country of 1.2 billion people don’t you think that having more cement used between 2011 and 2013 than the entirety of the United States in the 20th century is OTT?

      How do I know that that “statistic” isn’t some random factoid pulled out of the arse of someone with an axe to grind?

      There’s a lot of that goes on you know – I am a numbers man and a compulsive checker

      That is why my default position is skepticism

      When Shaun Hendy says 80,000 kiwis could die of Covid it was easy to show he is talking through a hole in his backside just by looking at the numbers coming from other countries

      Sadly a lot of people believed that crap, which is par for the course

      I’m no fan of China, but I am no fan of a nation so scared of a virus that they are locked up in their homes, kids not going to school and even if they are at school not being taught mathematics and science in a rigorous manner but shit like global warming instead

      Why do you think all my kids have bailed from New Zealand?

      Andrei

      September 17, 2021 at 1:34 pm

  3. How do I know that that “statistic” isn’t some random factoid pulled out of the arse of someone with an axe to grind?

    Fair enough but I recall reading the same (or similar) figure a few years ago in an article that was ecstatic about China’s post GFC economic growth so if there was an axe to grind it was the opposite of mine. I read that at the time and thought it was crazy even for a solidly growing economy, and when I look at things like this and all those ghost cities I’m even more certain that it was crazy. A GDP additive at best.

    Tom Hunter

    September 17, 2021 at 1:44 pm


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